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Cooperation and Efficiency in Markets

  • Milan Horniacek

Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 649)

Table of contents

  1. Front Matter
    Pages i-vii
  2. Milan Horniaček
    Pages 1-7
  3. Milan Horniaček
    Pages 9-19
  4. Milan Horniaček
    Pages 21-52
  5. Milan Horniaček
    Pages 53-83
  6. Milan Horniaček
    Pages 85-90
  7. Back Matter
    Pages 91-92

About this book

Introduction

The book deals with collusion between firms on both sides of a market that is immune to deviations by coalitions. We study this issue using an infinitely countably repeated game with discounting of future single period payoffs. A strict strong perfect equilibrium is the main solution concept that we apply. It requires that no coalition of players in no subgame can weakly Pareto improve the vector of continuation average discounted payoffs of its members by a deviation. If the sum of firms' average discounted profits is maximized along the equilibrium path then the equilibrium output of each type of good is produced with the lowest possible costs. If, in addition, all buyers are retailers (i.e., they resell the goods purchased in the analyzed market in a retail market) then the equilibrium vector of the quantities sold in the retail market is sold with the lowest possible selling costs. We specify sufficient conditions under which collusion increases consumer welfare.

Keywords

Coalitions Collusion Competition/Antitrust Policy Natural Oligopoly Repeated Games

Authors and affiliations

  • Milan Horniacek
    • 1
  1. 1.Faculty of Social and Economic Sciences, Institute of Public PolicyComenius UniversityBratislavaSlovakia

Bibliographic information

  • DOI https://doi.org/10.1007/978-3-642-19763-5
  • Copyright Information Springer-Verlag Berlin Heidelberg 2011
  • Publisher Name Springer, Berlin, Heidelberg
  • eBook Packages Business and Economics
  • Print ISBN 978-3-642-19762-8
  • Online ISBN 978-3-642-19763-5
  • Series Print ISSN 0075-8442
  • Buy this book on publisher's site